The programme for reforms announced by Martin Wheatley, the designated head of Britain’s new Financial Conduct Authority on Friday, includes a strict audit of the banks that provide the data used to calculate the rate, a cut on the number of rates used, as well as transition of control responsibility from The British Bankers Association (BBA) to a new oversight panel, which remains unidentified.

The move comes after multiple banks were accused of a series of the rate manipulations to benefit their trading position. Distorting the real state of a banks’ health added to the mess within the global financial system.

"The system is broken and needs a complete overhaul," Reuters quotes Wheatley.

Anyway, given the huge scale of reference to Libor in global finance, any sharp move would be painful. Drastic changes to the benchmark rate would have resulted in "huge amount of legacy contracts to resolve, introducing a lot of disputes," Darrell Duffie, a derivatives expert and finance professor at Stanford University, told the news agency.

The amount of contracts and loans tied to Libor exceeds $300trl.

Libor is the rate meant to reflect the cost of lending among key world banks operating in London financial markets or with London-based counterparts. It is calculated by Reuters Thomson which collects the data daily on the cost of lending from 18 major global banks in 15 currencies.